Brookfield Multiplex plots $4bn float

Brookfield Multiplex is advancing plans to list $4 billion of office property in the second half of this year and advisers are being lined up to help structure the transaction.

Dealbook believes Brookfield Multiplex is mulling a structure that would list the group’s entire office property portfolio on the market and Brookfield would retain a large holding in the listed entity, possibly as much as 50 per cent.

Credit Suisse, Deutsche Bank and Macquarie Capital have been suggested as the firms best positioned to advise on the expected float, although no formal mandates have been awarded.

Canadian giant Brookfield Asset Management took over the listed Multiplex Group in mid-2007 and has since taken heavy write-downs on the portfolio. Debt refinancing is looming and as Brookfield tends to manage assets, rather than own them, an exit has been widely speculated.

If the offer proceeds as expected, it will easily be the largest property float so far. Despite high expectations towards the end of calendar 2009 that there would be many property groups lining up to list on the ASX, few have eventuated.

Investa Australia Office Fund’s slated $1 billion offering, advised by Macquarie Capital and Morgan Stanley, was pulled in December after investors baulked at the pricing and structure. Investa had priced its float at $3 a unit, which was a premium to asset backing and a big stumbling block to institutions at the time.

The most immediately comparable listed fund to the Brookfield portfolio is Commonwealth Office Fund, which is yielding about 7 per cent and distribution yield is mid to high 5 per cent. It is trading at a discount to its net assets.

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Brookfield Multiplex’s office portfolio is dominated by about $2 billion of towers in Sydney, including the new Macquarie headquarters, followed by Melbourne, where the group has about $900 million of assets, including the Southern Cross East tower. In Brisbane it has about $100 million of assets.

Brookfield Multiplex said this year that due to the classification of certain financing facilities as current at the end of December 2009 it had a net current liability position of $351.4 million.

But it added that it had formal credit approval for a total of $407 million from three financial institutions, securing a three-year extension of the investment finance facility from its current May 2010 maturity date to May 20, 2013.